People take out payday loans for many reasons and those reasons aren’t always the best. Payday loans are easy to apply for and be approved. The money comes within 24 hours, usually overnight. If you have bad credit, you can still be approved. There’s no collateral to put up and most of the time, they do not show up on your credit. All these great aspects of payday loans make them tempting to take out for the wrong reasons.

Payday loans are short-term in nature and should be used for emergencies only. Don’t buy non-essential items with a payday loan. That means you don’t buy those fabulous shoes that are on sale at the mall with your payday loan. You think you’re saving money buying them on sale but you don’t need them at all, especially if you need to take out a payday loan to get them. It’s also not an emergency to replace a broken smart phone. You might think it is essential, but it’s not. Cell phones might be essential, but smart phones are not. Buy a cheaper, regular cell phone. Yes, they still do exist. Payday loans contain fees, if you couldn’t afford these things before taking out a payday loan, you certainly can’t afford them with a payday loan.

Also don’t take out a payday loan to increase your income. It’s not free money, it’s fee money in that the lender charges a fee to give you a payday loan. If you have a budget, it’s most likely tied to your income. If you need a payday loan to cover your budget, then you’re trying to use it as another form of income. It’s not. In this case, you need to re-address your budget and look for ways to cut expenses or find real ways of increasing your income.

If you’re in debt and have past due payments, a debt collector may suggest that you take out a payday loan to pay off this past due debt. You may consider doing that, but don’t do it because the debt collector told you to. It’s a sound strategy to pay off your past due debts to improve your credit score and keep debt collectors from harassing you but only do it if the strategy is right for you. Remember, payday loans come with fees and the principle and fees need to be paid back fast, usually on your next payday. You don’t have to take out a payday loan to pay a debt collector. Decide for yourself if that’s the best option.

Lastly, don’t take out a payday loan if you already have one out. Taking out another loan to pay back a previous one is a good way to spiral down into uncontrollable debt. Also, in many states it’s illegal to take out more than one payday loan. On your application, may lenders will ask if you already have a payday loan out, make sure you tell the truth. If you don’t, there might be consequences beyond just financial. Payday loans are a good thing for short-term cash needs, multiple payday loans are never a good thing.

We’ve covered the wrong reasons to take out a payday loan, now what are the right reasons? There’s really just one good reason to take out a payday loan- an emergency. There are many types of emergencies that would justify taking out a payday loan if you don’t have the cash to cover its expenses and traditional bank and credit card loans are out of the question. If you’re car breaks down and you use it to go to work or drive the kids around, it’s probably a good idea to get it fixed and fixed quickly. If there’s a medical situation that needs immediate help, you can use payday loan funds. There are many other examples and too many to list here. Use your best judgment and ask yourself, “is this absolutely necessary now?”

If you’re reading this and do not have an emergency cash need, now is a good time to think about planning for such a situation. Now is the perfect time to start saving a little bit of money to stash away in anticipation of emergency cash needed in the future. Saving money, even if it’s just a little bit, will help you avoid needing a payday loan when an emergency does happen.

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Payday Loan FAQ

Payday Consumer Notice:

APR

The APR of a payday loan varies in each state and depends on the lender, the advance amount, fees and terms of the transaction. The APR in our network of lenders can range from 265.36% to more than 700% on 14 day terms.

Implications of non-payment

Implications of non-payment vary from lender to lender and by state regulations. If you are unable to repay your loan you may have one or all of the consequences listed below depending upon the terms of your lender. Fees may include but are not limited to: insufficient fund fees, administrative fees, late fees, non-payment fees, court costs and legal fees.

Collection Practices, Credit Score Impact

Payday Loans are due and payable in full in one payment at the end of the loan term, unless the Lender offers renewals or other repayment options. Make sure to review the terms and conditions of your lender if you fail to pay on time.

Late payments of loans may result in additional fees or collection activities, or both. Each Lender has their own terms and conditions, please review their policies for further information.

Non-payment of credit could result in collection activities and your account could be turned over to a collection agency. Each Lender has their own terms and conditions, please review their policies for further information.

Failure to pay your loan on time could result in your lender reporting the delinquency to a credit reporting agency. This could result in the lowering of your credit score which could make borrowing more expensive in the future.

Renewal Policy

Renewal policies vary not only by lender but also by state regulations. Every Lender has their own renewal policy, which may differ from Lender to Lender. Renewal fees vary by lender. Please review your state regulations and you lender's renewal policy, terms and conditions.

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